Merkel ‘victory’ masks problems in Germany, Europe

Commentary: Majority of Germans voted against her

WASHINGTON (MarketWatch) — One fact that has been obscured in all the adulation for Chancellor Angela Merkel’s coming out ahead in Sunday’s election is that the majority of German voters rejected her.

Yes, her Christian Democrats gained nearly 8 percentage points compared to the last election in 2009, largely at the expense of her outgoing coalition partners, the Free Democrats. In fact, taken together, the two parties polled less this time, 46.3%, than the 48.4% they won in 2009.

And yes — given Germany’s convoluted voting system, which disenfranchised the 15.8% of the voters who chose parties that failed to meet the 5% hurdle to get into Parliament — her party nearly got an absolute majority of seats in Parliament.

But the fact remains that 58.5% of those who voted, voted for a different party and different policies. And keep in mind, nearly 29% of eligible voters stayed home.

Reuters

German Chancellor Angela Merkel

As MarketWatch columnist David Marsh pointed out, even though Merkel came out ahead in the vote, her position after this election is weaker than before because she has to form a coalition with a party less malleable than the Free Democrats.

Left-of-center parties actually have a majority of seats in the newly elected Parliament and could form a coalition government without Merkel if they had the political will to do so.

The majority of German voters don’t want Merkel’s policy of muddling through on the euro
EURUSD, -0.0728%
crisis and kicking the can down the road on Germany’s own needs for infrastructure investment, energy and underpinning the social compact.

So, two out of five German voters love their “Angie” — we knew that. That doesn’t change the fact that Merkel’s plodding along without vision or charisma not only sucks the air out of German political life, it is smothering the European economy.

This will become patently clear in the weeks ahead as Merkel wrangles over a coalition government and issues in Europe — that which have been held in abeyance pending the German election — come to the fore.

What has also been obscured by the accolades for Merkel’s predictable personal triumph is that many of these European issues hanging fire could quickly spin out of her or anybody else’s control.

First up is Greece, which was already haggling over its next installment of bailout funds as Germans went to the polls on Sunday.

Merkel searches for a new coalition partner

(4:10)

Angela Merkel emerged as the winner of the German election on Sunday, but her coalition partners, the Free Democrats, failed to make the 5% required for parliamentary representation. Matthew Karnitschnig explains what happens next and who is likely to be the Chancellor’s coalition partner. Photo: AP

To qualify for the new aid in October, the Greek government is supposed to furlough another 12,500 government workers, liquidate or restructure some state-owned industries and possibly lift the ban on mortgage foreclosures.

There are already massive protests in Athens this week against the furloughs along with an upswing in violence as the neo-Nazi Golden Dawn party intensifies its opposition

It’s an open question just how flexible Merkel will be on Greek aid now that she is free from the threat of the anti-euro Alternative for Germany party getting into Parliament. She must still hold her ground in coalition negotiations with the Social Democrats and will certainly want to manipulate it so that any concessions appear to be forced upon her.

She will, rightly, calculate that the Social Democratic leadership is not smart enough to avoid that trap. After all, her rival as chancellor-candidate, Peer Steinbrueck, deserves some of the credit for her electoral result after his gaffe-prone and generally incompetent campaign.

Alternatively, the Social Democrats, largely co-opted already on Merkel’s orthodox neoliberal policies, could completely abandon what remains of their principles and just go along with more austerity. Then they can go the way of the Free Democrats in the next election and suffer a further precipitous drop in support.

Numerous other potential crises besides Greece are brewing in the euro zone. There are the obvious political problems in Italy and Spain, the still-unresolved issue of Cyprus, and the ever-present danger of sudden bank failure anywhere in the euro zone that could bring a cascade of other failures in its wake.

Even if Merkel understood how these problems are the flip side of Germany’s precarious prosperity — and there’s no evidence she does — it is far too late for her to do much of anything about it.

Pundits now claim that Merkel’s apparent shortcomings are strengths and that other leaders should emulate her homely style, her tactic of deflecting hard questions and her taking things step by step even if those steps lead to recession, unemployment, and not only a lost decade but perhaps a lost generation in Europe.

The majority of Germans didn’t buy it. Let’s wait and see how it plays out in Europe.

Intraday Data provided by SIX Financial Information and subject to terms of use.
Historical and current end-of-day data provided by SIX Financial Information. Intraday data
delayed per exchange requirements. S&P/Dow Jones Indices (SM) from Dow Jones & Company, Inc.
All quotes are in local exchange time. Real time last sale data provided by NASDAQ. More
information on NASDAQ traded symbols and their current financial status. Intraday
data delayed 15 minutes for Nasdaq, and 20 minutes for other exchanges. S&P/Dow Jones Indices (SM)
from Dow Jones & Company, Inc. SEHK intraday data is provided by SIX Financial Information and is
at least 60-minutes delayed. All quotes are in local exchange time.